Hot Topic: Will Failure to Raise the Debt Ceiling Lead to an Economic Crisis?

The news these days is full of analyses giving us dire warnings of the consequences of blowing through the debt ceiling, currently at $16.7 trillion. The Treasury Department says that the government will reach the limit of its authority to borrow on October 17. After that, it’s anybody’s guess as to how bad it will be.

There are a few naysayers who play down the real-world effects of a default. There are some who say it is impossible for the U.S. to default on its obligations. However, there appears to be a rough agreement – at least from professional money people — that nothing much will happen right away but that the longer the crisis continues, the worse it will get.

You’ve heard from the pundits and the moneymen. Now it’s your turn to sound off. Will failure to raise the debt ceiling lead to an economic crisis? Leave your thoughts below in the comments. If you haven’t registered to comment yet, please take a few seconds to do so.

The question up for consideration: Do I think there will be a crisis if we don't raise the debt limit? My answer: I think exactly the opposite, if we don't STOP raising the debt limit there will be a crisis .. All the scare stories in the world about "default" are not going to make the situation any different! .. Obama says raising the debt limit does not increase the debt .. he thinks people are stupid ( I mean people besides the ones that voted to re-elect him)

Those outside of the US who are to be taken most seriously - these are the folk who are trading in any debt from any US government. I refer to debt from the federal government, all the state governments, and all local governments.

There is no reason that failing to raise the debt limit will lead to a "Default on Treasury Bills." Unless the President wants to inflict the maximum pain and damage on the US economy and US citizens. This is exactly how he is handling the Govt Shutdown, so (based on past performance) that this is exactly what he will do on Oct 17th. On purpose. Intentionally.

Can you imagine ANY scenario where Obama or Reid would stop paying Social Security or Medicare to Granny instead of paying "banksters" interest on their 'abusive and questionable' US debt? These "Entitlements" are the "promises Congress made" that Obama references in every whinning speech.

The question up for consideration: Do I think there will be a crisis if we don't raise the debt limit? My answer: I think exactly the opposite, if we don't STOP raising the debt limit there will be a crisis .. All the scare stories in the world about "default" are not going to make the situation any different! .. Obama says raising the debt limit does not increase the debt .. he thinks people are stupid ( I mean people besides the ones that voted to re-elect him)

The dirty little secret is that the federal government takes in about $225 billion a month and has to pay out interest on the debt in the amount of $18.5 billion a month. In other words there is no possible way the U.S. can default unless the Obama administration REFUSES to pay the interest on the debt, highly highly unlikely. So why the enormous fuss? Because not raising the debt ceiling would force the Obama administration, in cooperation with Congress, to actually - oh the horror! - not grow every last one of its pet projects. The debt would be paid but the spending orgy would take a minor hit. And this the Democrats cannot abide. Once you understand the obscenity of liberal spending addiction to infinity you might just get a leetle mad.

Let's see. Because the debt limit isn't raised, the Treasury Dept. , A, can no longer issue more bills and bonds to buyers, B, as in banks and foreign individuals. But the "independent" Federal reserve, C, can buy (redeem) the bonds that B, for example the Chinese, hold, replacing those bonds with dollars, the world reserve currency. So now the Treasury can resell those redeemed bonds without going over the debt limit. See, one hand greases the other hand. No debt crisis. Or, as one treasury sec. advised the Europeans, It's our dollar (and debt issued in a medium declining in value) but it's your problem.

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